Texas Attorney General Greg Abbott said the state is investigating a fraudulent tax return scheme and warned East Texas residents to avoid recruiters from Syam Tax Services LLC.

The Texas Attorney General’s Office does not typically acknowledge investigations but disclosed the investigation into Syam Tax Services in order to help prevent additional victims from being harmed by the tax fraud scheme.

Although the state’s investigation is still ongoing, the preliminary results show that Syam Tax Services enlisted recruiters to canvass small East Texas churches and senior residences for elderly victims who receive Social Security or disability benefits. Prospective victims are told that low-income Social Security recipients are eligible for a cash benefit under a federal stimulus funds program.

Next, victims are told to complete a form, which includes providing their driver’s license, Social Security and bank account numbers to Syam’s recruiters in order to receive their federal stimulus benefits. Without the victim’s knowledge, Syam subsequently prepares and files a fraudulent tax return in the victim’s name.

In reality, there is not a federal stimulus benefit payment for low-income Social Security recipients, the Attorney General’s office said. But the tax return prepared by Syam and submitted to the Internal Revenue Service not only requests the payment, but also directs the IRS to deposit more than half of the resulting tax refund into Syam’s own bank account.

When the IRS realizes that the tax return is fraudulent, the agency contacts the victim and demands that the taxpayer repay the entire tax refund, plus penalties and interest. Since Syam never informed victims that it would file a tax return or retain a portion of the refund, victims first learn they are liable for the full amount of the fraudulent tax refund when they receive the letter from the IRS.

Betty Murphy, a senior Texan living in Diboll, Texas, was recruited by her friend’s home health care provider to meet with one of Syam’s recruiters and fill out a form to obtain her cash benefit.

“I had no intentions of accepting anything I have to pay back because I can’t afford it. It’s just been a real hard thing,” Murphy told state investigators. “It has totally destroyed my Christmas. It’s been a headache.”

Eloise Davis, a tax specialist whose sister-in-law fell victim to the scam, explained, “They are taking advantage of disabled people, people on Social Security, low-income people, and that’s not right.”

Based upon what state investigators have learned thus far, the tax refund scheme appears to have primarily targeted victims in Lufkin, Beaumont and Port Arthur, Texas. Because of the scheme, low-income Texans in these East Texas communities have been left with a debt to the IRS and are being required to repay the full amount of the fraudulent refund—both the portion of the refund they actually received and the amount deposited into Syam’s accounts. Further, because the victims provided Syam’s recruiters with their personal identifying and financial information, victims also face the risk of identity theft.

To avoid becoming a tax scam victim, the Office of the Attorney General is urging Texans to take several steps before hiring a tax return preparation professional:

• Ask for the tax preparer’s credentials.
• Check with the Better Business Bureau for complaints against the tax preparer.
• Verify whether the tax preparer is a certified public accountant.
• Make sure the business is open year-round in the event clients need to ask follow-up questions about their returns.
• Read the tax return carefully before signing it. Never sign a form with spaces left blank.

Texans who believe their identity was stolen should take the following actions:

• File a police report with the local law enforcement agency and keep a copy of that report. Many banks and credit agencies require such a report before they will acknowledge that a theft has occurred.
• Obtain an ID Theft Kit from the Texas Attorney General’s Office.
• Contact the three primary credit reporting bureaus and request a security alert or freeze placed on the report.
• Request a copy of the credit report and review it for unauthorized account activity.
• Report unauthorized charges and accounts to the appropriate credit issuers and credit bureaus immediately by phone and in writing. Cancel the accounts.
• Immediately cancel credit and debit cards and get replacements if a purse or wallet was stolen. Put a “stop payment” on all lost or stolen checks.
• Free credit reports – Texans are able to obtain free copies of their credit report and can request one report from each of the three major bureaus. To order free copies of their credit report, Texans can go online at www.annualcreditreport.com or call (877) 322-8228.

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